Thursday, February 25, 2010

Confidence Growing Slowly In Freight And Shipping Circles

Global Signs are Hopeful as Numbers Rise
Shipping News Feature

WORLD WIDE – The shipping industry has been depressed for so long now that the only hopeful mantra heard lately has been that freight levels must have bottomed out. As the figures creep in it would appear that finally some hope is returning to the market. US road haulage figures are rising; the American Trucking Association for hire truck tonnage was up last month against the previous couple of years and the Baltic Dry Index, despite holding at a fraction of its value in boom times, at least seems to be levelling with ships of all sizes trading at reasonably steady daily rates.

The major container shipping lines, after numerous voluntary rate agreements and some horrific figures, also seem to be holding rates steady. Unanimity is probably essential in this regard to ensure survival and there is still also a lot of confidence that rail freight must grow, despite infrastructure costs, the environmental and economy of scale arguments proving incontestable to many.

The problems of course still exist. There are still lines of empty ships moored in such disparate places as Scottish Lochs and Indonesian coastal bays with many more new builds due for delivery. Rail progress everywhere is slower than anticipated by many and development costs can be enormous. One of the most worrying factors for the bulk shippers is their increasing dependence on one market – China. Anyone running a business knows that having all your eggs in one basket makes you extremely vulnerable and if Chinese demand for coal and ore drops things could get sticky for some.

Expect to see more small and middle sized companies close down in the coming months. The pressures have been building so long that freight forwarders and transport companies in this sector can only absorb so much pressure but the signs are that those in the industry able to withstand market forces may just see sparks of hope in the months ahead.